Ducker v Smith
[2011] NSWCA 212
•27 July 2011
Court of Appeal
New South Wales
Case Title: Ducker v Smith Medium Neutral Citation: [2011] NSWCA 212 Hearing Date(s): 15 April 2011 Decision Date: 27 July 2011 Jurisdiction: Before: Hodgson JA at [1]
McColl JA at [5]
Basten JA at [68]Decision: Appeal dismissed with costs
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]Catchwords: FAMILY LAW - de facto relationship - adjustment of property interests - s 20, Property (Relationships) Act 1984 (NSW)
FAMILY LAW - de facto relationship - evaluation of contributions of parties over 13 year period of cohabitation - relevance of initial contributions where real estate purchased partway through relationship - evaluation of non-financial contributions - discretion of trial judge to determine methodology when considering s 20 order - need to articulate findings and reasons for order - whether adjustment order just and equitable
FAMILY LAW - de facto relationship - departure of one co-owner from co-owned property - whether departed co-owner entitled to occupation fee
Legislation Cited: Family Provision Act 1982 (NSW)
Property (Relationships) Act 1984 (NSW)Cases Cited: Baker v Towle [2008] NSWCA 73
Bilous v Mudaliar [2006] NSWCA 38; (2006) 65 NSWLR 615
Callow v Rupchev [2009] NSWCA 148; (2009) 14 BPR 27,533
Chanter v Catts [2005] NSWCA 411; (2005) 64 NSWLR 360
French v Barcham [2008] EWHC 1505 (Ch); [2009] 1 WLR 1124; [2009] 1 All ER 145
Golosky v Golosky [1993] NSWCA 111
Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490
House v R [1936] HCA 40; (1936) 55 CLR 499
Howlett v Neilson [2005] NSWCA 149; (2005) 33 Fam L R 402
Manns v Kennedy [2007] NSWCA 217
Saric v Steward [2006] NSWCA 260; (2007) DFC 95,401
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201Texts Cited: Category: Principal judgment Parties: Alan Graham Ducker - Appellant
Janet Adele Smith - RespondentRepresentation - Counsel: Mr E Finnane - Appellant
Ms D Reid - Respondent- Solicitors: Irene E Pickel - Appellant
Mitry Lawyers - RespondentFile number(s): 2010/269157 Decision Under Appeal - Court / Tribunal: - Before: Tamberlin AJ - Date of Decision: 14 May 2010 - Citation: Ducker v Smith [2010] NSWSC 462 - Court File Number(s) SC 2009/287699 Publication Restriction: No
Judgment
HODGSON JA: I agree with the orders proposed by McColl JA and with her reasons. I would add the following comments.
I think it is desirable that, in Property (Relationships) Act cases, there generally be clear findings as to (1) the assets of the parties at the beginning of the relationship, at the end of the relationship, and at the time of the hearing; (2) the financial and non-financial contributions of the parties during the relationship and, where relevant, after its end; and (3) the equality or inequality of those contributions, giving reasons, particularly in cases where significant inequality of contributions is found (dealing with the issue of whether financial and non-financial contributions balance out).
This is not because the result in such cases follows mathematically from such findings. Plainly it does not: the Act requires a holistic value judgment in the exercise of a discretionary power. However, I think that to make such findings and to give such reasons promotes transparency and consistency in decision-making.
In this case the primary judge did not fully detail all such findings and reasons. However, as shown by McColl JA, his reasons sufficiently showed the basis of the orders which he made, and the orders themselves were within the available discretionary range.
McCOLL JA: Mr Alan Graham Ducker, the appellant, and Ms Janet Adele Smith, the respondent, commenced a de facto relationship in the first half of 1994. In the first five years of the relationship the parties lived in rental accommodation. In February 1999 they moved into a property near Bowral (known as "March Rising"), which the appellant bought for $455,000. They lived together at "March Rising" until they separated in late February 2007. The respondent still lived at the property at the time of trial.
Following the break down of their relationship the appellant sought orders pursuant to s 20 of the Property (Relationships) Act 1984 (NSW) (the "PR Act") that "March Rising" be sold and that he receive 80 per cent of the net sale proceeds, that the respondent pay him an occupation fee of $1,115 per month from 1 March 2007 and orders in relation to certain chattels. The respondent filed no cross claim but in her defence sought a transfer to her of the appellant's interest in "March Rising" simultaneously with a payment by her to him of the sum of $100,000.
Tamberlin AJ ordered that upon payment of $200,000 to the appellant, the respondent would receive the right, title and interest in the property at "March Rising": Ducker v Smith [2010] NSWSC 462.
The appellant appeals from that decision. He seeks to have the primary judge's orders set aside and, in their place, an order that the parties sell "March Rising" and that, after the deduction of expenses, the balance be divided equally between the parties. He also seeks an order that the respondent pay him an occupation allowance in respect of her occupation of "March Rising" of $1,115 per month from 1 March 2007 until the date of completion of the sale.
Legislative Framework
Section 20 of the PR Act relevantly provides:
"20 Application for adjustment
(1) On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to:
(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and
(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties ..."
Statement of the case
The following facts are uncontroversial and can be taken from the primary judgment.
The appellant and the respondent had known each other since 1978. Both had been married twice before they began cohabiting in the first half of 1994 when the appellant moved into a property the respondent then rented in Paddington. Thereafter they shared the rental costs.
In February 1999 the appellant bought "March Rising" for $455,000. He purchased the property in the names of both the respondent and himself as tenants in common. He paid for "March Rising" from the proceeds of the sale of a property he owned in Wylde Street, Potts Point which he sold for $490,000: primary judgment (at [6] - [7], [13]). He had bought Wylde Street in the mid-1980s in the name of his company, Salitre Holding Pty Ltd ("Salitre").
The appellant was a share trader. He had a seat on the Sydney Futures Exchange. Once they moved to "March Rising" he appears to have worked from a home office. From 1979 until the time of the proceedings below he traded on his own account by sub-underwriting equity issues and by financial trading on the Stock Exchange: primary judgment (at [9]).
The respondent had worked as an interior decorator in Double Bay in the 1970s. She was also engaged in the antiques market and involved in home renovations. In the period 1993 through 1999 she also made substantial capital gains buying, renovating and selling three properties in Paddington: primary judgment (at [8]). From 1992 she was the manager of an antique shop in Glebe where she earned $700 per week. She sold some of her own antique stock there from time to time. In early 1994 her mother died, leaving her cash, furniture, jewellery and a house. She sold the house and received $148,000 from the estate. She said the chattels she inherited were worth about $65,000. At about the same time she said she received about $200,000 in cash as well as chattels in a divorce settlement: primary judgment (at [14]). At the time of hearing, the respondent carried on an interior decorating business and had an antique shop in Mittagong.
Over the period 1999 to 2007 the respondent paid over $450,000 to renovate and improve "March Rising". At separation, on 25 February 2007, the appellant ceased to live with the respondent. Although not referred to by the primary judge, it is common ground that at about this time the respondent changed the locks on the property effectively excluding the appellant. The respondent continued to live at "March Rising". It was agreed that the rental value of the property was $600 per week throughout the period to trial.
During their relationship, the appellant accumulated substantial funds which, at the time of trial, he held in the "G Ducker Super Fund". There was $723,000 in the superannuation fund at the date of separation. The case was conducted on the basis that the appellant had an absolute and present entitlement to that fund: cf Chanter v Catts [2005] NSWCA 411; (2005) 64 NSWLR 360 (at [91]) per Bryson JA. Indeed one of the respondent's arguments at trial was that the primary judge should take into consideration the fact that the appellant had substantially eroded that fund since their separation by treating it as a cash resource.
At the time of separation "March Rising" was worth about $1.075 million. At the time of the hearing the total assets of the parties were $1.56 million. The agreed market value of "March Rising" was then $830,000. The superannuation fund of the appellant had diminished significantly from February 2007 and was worth $478,000. The respondent owned chattels valued at $68,000 and the appellant's chattels were valued at approximately $52,000. He also had artworks valued at $126,000.
There was no agreement as to the value of the respective parties' assets at the commencement of the relationship. When cohabitation began the appellant had the property in Wylde Street, Potts Point, approximately $84,000 in Salitre, $170,000 in short-term deposits with Advance Bank, and approximately $200,000 worth of shares in the form of trading stock held in his own name or the name of Salitre. He also claimed that Salitre had $151,683 in an MLC Cash Management Trust and owed him approximately $174,000 as at 30 June 1993: primary judgment (at [11]).
The respondent said that at the commencement of cohabitation she had the $200,000 settlement from her husband, $148,000 from her mother's estate and antique items bringing her total assets to $600,000: primary judgment (at [15]).
Primary judgment
The primary judge informed himself of the principles to be applied in undertaking the exercise required by s 20 of the PR Act by reference to Baker v Towle [2008] NSWCA 73 (at [42] - [43]); Bilous v Mudaliar [2006] NSWCA 38; (2006) 65 NSWLR 615 (at [40] - [43]) and Manns v Kennedy [2007] NSWCA 217 (at [61] - [65]). There is no suggestion he erred in this respect.
The primary judge noted (at [47]) that during the relationship both parties worked and earned substantial income. His Honour found that the appellant earned a sizeable income from trading in shares and futures on the Sydney Stock Exchange. He was also satisfied that the respondent worked extensive hours during most of the 13 year relationship in the antique and renovation business and earned a substantial income. He further concluded that the parties had a relatively close personal relationship.
The primary judge concluded (at [33]) that in general he preferred the respondent's evidence where it was inconsistent with the appellant's evidence. This appears to have been because she had kept detailed records over certain periods and her recollection on important issues was clearer and more consistent than his. However his Honour noted that both parties' recollections had defects and for that reason approached their evidence "having regard to its consistency with objective facts and any relevant documentary material where available."
The primary judge first addressed the question of the parties' contributions at the commencement of their cohabitation. However his Honour divided this analysis into two time periods. The first commenced in 1994 and lasted until 1999, the second was during the period they owned "March Rising" until separation. He said he adopted this approach "because a number of sales and purchases took place in the initial period which crystallised in the value of the assets": primary judgment (at [34]).
The primary judge found (at [43]) that at the commencement of their cohabitation the financial assets the appellant brought to the relationship had a value of approximately $820,000. This figure included $410,000 in relation to the Wylde Street property (at [37]), $100,000 allowed in respect of his share portfolio (at [38]), $120,000 found to have been invested with the Advance Bank (at [40]), a $65,000 allowance for his seat on the Sydney Futures Exchange (at [41]), artworks for which he allowed a figure in the order of $40,000 (at [42]), and the net worth of Salitre (at [43]).
The primary judge was satisfied that the respondent's assets as at April 1994 and in the period up to 1999 totalled "in the order of at least $580,000". His Honour accepted that she had received $200,000 in cash in her divorce settlement, had inherited $210,000 and had accumulated profits from developing three residential properties as well as from her antique and renovation business: primary judgment (at [45] - [46]).
The primary judge then considered the parties' contributions during cohabitation. His Honour observed that both earned substantial incomes during the 13 years, the appellant in trading in shares and futures, the respondent in her antique and renovation business: primary judgment (at [47]).
His Honour found that the respondent spent in excess of $450,000 to renovate and improve "March Rising" (which it was accepted was run-down at the time of purchase - see [52]) and that "due allowance should be made for this in determining the nature and extent of the interests of the parties in "March Rising" (at [47]). His Honour also accepted (at [48]) that the respondent took on responsibility for the management and day to day running of the property. He continued (at [48]):
"It is not possible to be exact as to the amounts of input by either party during the period, but I accept the large contribution claimed by Ms Smith and I think that a very substantial adjustment should be made to the property of the parties to reflect this contribution ." (Emphasis added)
The primary judge took into account (at [50]) that the rent the parties paid for the property they occupied from 1994 to 1999 was about $25,000 per year, which they shared and that, "during this period", the appellant built up his investment portfolio, "so that by the time of separation in 2007 it was worth about $723,000". It is this portfolio which apparently constituted the appellant's superannuation fund, having been converted into that form to take advantage of beneficial superannuation legislation.
The primary judge noted (at [51]) that it was significant that "March Rising" was purchased in the name of both parties in circumstances in which his Honour accepted (at [52]) that the appellant said to the respondent words to the effect:
"I will purchase March Rising with the proceeds from Potts Point (Wylde Street) and gift half the property to you if you will extend, renovate and decorate the property as well as doing the garden. It will use up your savings but I will do the share trading and save for our old age."
His Honour found that the parties proceeded thereafter on the basis that that statement "accurately characterised the nature of their respective contributions and interest in relation to that property." The statement also provided the context for determining whether the respondent would have "expended her substantial resources carefully accumulated up to 1999 on the improvement of 'March Rising' ": primary judgment (at [53]).
Accordingly, his Honour concluded (at [54]) that he should take into account that the respondent made far greater contributions to the management and administration of the property which substantially enhanced the property's value. In contrast, his Honour (at [56]) found that during the same period the appellant made minimal contributions to that exercise, being engaged in share dealings.
The primary judge next considered the parties' assets at the time of hearing. He found (at [57]) that the superannuation fund and "March Rising" made up the bulk of these assets and that each had declined in value since separation: the superannuation fund to about $478,000 and "March Rising" to $830,000. In addition his Honour included in their joint assets chattels owned by each party: $178,000 by the appellant and $68,000 by the respondent. Accordingly he found the value of the parties' assets, at the date of hearing, to be in the order of $1.56 million.
The primary judge rejected (at [58]) the appellant's claim that the respondent should pay an occupation fee in respect of her continued residence at "March Rising", apparently accepting her submission that this was inappropriate having regard to the fact she had paid all expenses for the property since separation, as well as maintaining and improving it. The primary judge also did not accept the respondent's submission that the fact that the appellant's share portfolio and cash management funds had depreciated after separation should be taken into account in the respondent's favour. Nor did he accept that she should be disadvantaged because of the fall in the market value of "March Rising". His Honour concluded:
"61 Bearing in mind the substantial resources which both parties brought to the relationship; the closeness and the long-term nature of the relationship over 13 years; that Mr Ducker paid for the purchase of 'March Rising'; the contributions made by both parties to the resources pool, and the non-financial contributions of the parties, the just and equitable adjustment is that the relative interests of the parties in the assets of the relationship should be adjusted so that Mr Ducker transfers his interest in 'March Rising' to Ms Smith on her tendering an amount of $200,000 to him for such transfer within a period of 90 days from the date of this judgment and if this is not tendered the property should be sold and the net proceeds distributed between the parties on the basis that Ms Smith receives 75 per cent and Mr Ducker receives the balance. It is noted that the three sculptures situated in the garden at 'March Rising' are the property of the plaintiff, who is entitled to collect these items. Otherwise there will be no other adjustments made to the property interests of the parties."
The effect of his Honour's order, once the respondent paid the appellant the sum of $200,000 and he transferred his interest in "March Rising" to her (which has occurred) is that the appellant received $856,000 of the global pool of assets and the respondent $698,000 - a difference of $158,000.
Issues on appeal
The appellant relies in substance on the following grounds of appeal:
(1) The primary judge erred in law by failing to articulate a reasoned basis for his decision;
(2) The primary judge erred in law in the exercise of his discretion in that the effect of his orders were unreasonable or plainly unjust;
(3) The primary judge erred in law by failing to make findings of fact necessary to identify, then compare, the parties' contributions;
(4) That the primary judge erred in his factual findings in relation to the amount the appellant had invested in an account with the Advance Bank at the commencement of cohabitation;
(5) That the primary judge erred in concluding that the appellant's contributions to March Rising were minimal; and
(6) The primary judge erred in failing to make an allowance in the appellant's favour in respect of the respondent's occupation of March Rising.
The grounds of appeal contained substantial elaboration of each complaint, which is sufficiently encapsulated by recounting the appellant's submissions.
Submissions
The appellant's first factual complaint, that the primary judge erred in respect of his finding of the quantum of his investment in the Advance Bank at the commencement of the relationship, can be succinctly stated and briefly disposed of. The appellant gave evidence at trial that he had approximately $170,000 in short term deposits with the Advance Bank in 1994. Although there was no direct evidence of that investment, he submitted (as the primary judge noted at [39]) that the capital sum invested would have been of that order because his income tax return at the time showed he was earning interest on it of about $9,500 in one year and $15,000 in the following year. The primary judge based his conclusion (at [40]) that there was about $120,000 in this account on the standard variable interest rate on home mortgages in March 1999 being about nine per cent. It is convenient to record at this point that in so finding his Honour, with respect, failed to take into account the concession made by the respondent's counsel at trial that the appellant had the amount for which he contended on deposit at the relevant time. Although counsel for the respondent's written submissions on appeal cavilled with the proposition that what she had said at trial could amount to an admission, ultimately she did not resist the appellant's submission that his Honour ought to have allowed $170,000 at the commencement of the relationship in respect of this investment.
The appellant's next factual complaint went to the primary judge's conclusion (at [56]) that the appellant's contributions to the improvement of "March Rising" during the parties' cohabitation were "minimal". Counsel's written submissions enumerated a number of items said to represent his undisputed contributions to the renovation and improvement of the property in the order of $32,000, to which he sought in oral submissions to add a further $5,000.
The respondent contended that the primary judge had not been required to make itemised findings in respect of these contributions, noting that his Honour had accepted (at [48]) that the appellant had "carried out or arranged some minor work" and that it was "not possible to be exact as to amounts of input by either party during the period". This was in the context of his Honour's acceptance that it was the respondent who had taken the most significant and active part in relation to the management, renovation and improvements of the property during cohabitation such as warranted a substantial adjustment in her favour.
The final particular factual complaint the appellant advanced was that the primary judge ought to have made an allowance in his favour for the respondent's continued occupation of "March Rising" since the parties' separation. He submitted that he was entitled to such an allowance because the respondent had ousted him from the property by changing the locks and not giving him a set of keys. Even if it was not a case of ouster in the traditional sense, the appellant contended that the respondent was obliged to pay him an occupation fee, having excluded him from the property. He complained that the primary judge erred in apparently refusing to make that allowance because of the amounts the respondent had expended in maintaining the property. As to the quantum of that expenditure, the appellant submitted that such expenses if they could be inferred to relate to such matters as waste collection, land and water rates and building insurance amounted to approximately $4,432 per annum in respect of which he conceded there should, in substance, be a set-off against the occupation fee in the respondent's favour. Insofar as it appears that the primary judge regarded the "excellent condition" of the property as militating against making the allowance sought, the appellant submitted that if the property had been rented a tenant would have been expected to keep it in good repair as well as pay rent, that the respondent had not given evidence of anything she had done to keep the property in the state the primary judge described and, further, to the extent work had been undertaken on the property, it had been carried out by a person who occupied a cottage on it with corresponding deduction to the rent due in respect of that occupancy. The appellant submitted that, after giving the respondent an allowance for her expenditure, the primary judge should have allowed him $42,383 in this respect.
The respondent emphasised that whether or not an occupancy fee might be allowed was in the nature of a discretionary decision, and was one which his Honour was not obliged to make having regard to the fact that determining what is just and equitable for the purposes of s 20 of the PR Act does not entail a reductionist process of putting a money value on every alleged contribution (or otherwise). Rather, s 20 required the making of a holistic value judgment. Adopting that approach, the respondent submitted there were other matters such as the dissipation of the appellant's superannuation fund since separation in respect of which the primary judge had refused to make an adjustment in her favour.
Turning to more general matters, the appellant next complained that while the primary judge determined his financial assets at the commencement of the relationship in early 1994 at approximately $820,000 (and so doing discounted back to that date the value of assets he had held at 1999), insofar as the respondent was concerned, while originally embarking upon the exercise of determining her financial assets when cohabitation commenced in early 1994, his Honour had examined her financial position over the next five years in order to conclude that as at 1999 her contributions were in the order of at least $580,000. Although in his written submissions the appellant complained that the primary judge did not explain how the sum of $410,000 grew to $580,000 in the period to 1999, in his oral submissions his counsel said he was not seeking to challenge that figure as at that date. Rather, as I understand his submission, it was that if the primary judge was identifying the parties' contributions as at 1999, his Honour ought to have added the sum of $50,000 he had erroneously debited from the Advance Bank account as well as the two amounts ($90,000 in respect of the Wylde Street property ([37]) and $25,000 in respect of the sale of his seat on the Stock Exchange ([41])) by which he had discounted the appellant's assets to reach a 1994 value.
The appellant also submitted that the primary judge's reasons did not disclose why he chose to value the parties' respective assets at different dates. By doing so, the appellant further complained, his Honour was unable to make a proper comparison of the resources both parties brought to the relationship. The appellant contended that the primary judge ought to have taken into account the assets the respondent brought into the relationship at its commencement and, had he done so, he would have concluded that the respondent's contribution at that date was $410,000 representing the $200,000 she had received in her divorce settlement (part of which she had invested in property at the time of cohabitation commencing) and the inheritance received at about the time cohabitation commenced of $210,000.
The respondent submitted that the passage of time to trial since the parties commenced cohabitation had meant neither party had been able to produce much at trial in the way of supporting documentation for their financial assets in 1994. Accordingly, the primary judge had had to resolve that issue on the basis of the documentary evidence, such as it was, and the parties' affidavit evidence taking into account his credit findings. Insofar as the respondent's assets were concerned, she submitted that the task of determining their value at the commencement of cohabitation was also rendered difficult because in addition to the two sums to which the respondent referred she had had trading stock, as well as cash from a sale of antiques and, further, had been engaged in property investment and renovation at the commencement of the relationship - having purchased an investment property in Paddington in July 1993 just before cohabitation commenced.
The respondent also submitted that, had the primary judge undertaken the exercise of valuing the appellant's assets as at 1999, he would have concluded that he could not have had significantly more than the purchase price (including expenses) for "March Rising".
Finally, and as an overarching submission, the appellant submitted that the primary judge failed to explain why, having regard to the disproportion between the assets the appellant and the respondent brought to the relationship, taking into account that he paid for "March Rising" and even allowing for the primary judge's conclusion that the respondent made greater contributions to the management, renovation and improvement of that property, it was just and equitable to make the order that he did. He submitted that when one had regard to the global asset pool, the effect of the primary judge's orders were that he retained 55.08 per cent and the respondent 44.92 per cent of that pool. Alternatively, if one had regard only to "March Rising", the effect of the primary judge's order was that he received 24.1 per cent of the value of the property whereas the respondent received, in net terms, 75.9 per cent of its value.
The appellant submitted that either way, the outcome did not obviously flow from the primary judge's findings as to the parties' respective contributions to either the global asset pool or to "March Rising". In particular, in addition to the matters to which I have already referred, the appellant complained that the primary judge ought to have taken into consideration the respondent's sole occupancy of the property post separation, the fact that his Honour made no findings that the respondent contributed to the appellant's other assets and the fact that, even on the primary judge's findings and without taking into account the other factual complaints to which I have already referred, the appellant's financial contributions to "March Rising" exceeded the respondent's. The result of the primary judge's order, the appellant submitted, was that he made a substantial capital loss on the sums he had invested in "March Rising", whereas the respondent made a substantial capital gain.
In those circumstances, the appellant submitted, the primary judge's order was plainly unjust or unreasonable.
The respondent submitted that the primary judge's reasons had to be understood not only against the background of his conclusion that she made by far the greater contribution to the improvement in the capital value of "March Rising" during the period the parties lived in that property but, too, that his Honour had found that it was the respondent's activities which enabled the appellant to create substantially, if not entirely, "his" superannuation fund. She also submitted that, although the primary judge had not referred to it explicitly, she had not worked for approximately two years while supervising the renovation of the property. This was supported by her main trial affidavit and does not appear to have been challenged. She further argued that the primary judge's order also had to be understood in the context in which the appellant retained the entirety of his superannuation fund. Once his Honour's order was so understood, she submitted, it was apparent that the primary judge's order was clearly just and equitable and that neither party had made any substantial capital loss or gain on their investment in "March Rising".
Legal principles
The primary judge (at [22]) correctly stated that the application of s 20 of the PR Act required him to identify and value the property of the parties, identify and value their respective contributions of the types referred to in s 20 and then determine what, if any, order was just and equitable having regard to these contributions.
His Honour found helpful (at [23]), passages from Ipp JA's reasons in Bilous v Mudaliar (at [40] - [43]) concerning the general approach that may be adopted when evaluating contributions for the purposes of s 20. Some of those passages warrant repetition having regard to certain of the submissions on appeal:
"[41] In Davey v Lee (1990) 13 Fam L R 688 at 689, McLelland J said:
'... [T]he court is not required under s 20 to undertake a reductionist process analogous to the taking of partnership accounts (notoriously one of the most time-consuming and expensive of litigious exercises) by examining every alleged 'contribution' of the kinds described in the section with a view to putting a monetary value on it in order to reach an accounting balance one way or the other, which is to be then eliminated by the requisite financial adjustment. Rather the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind.'
I would endorse this approach as well as his Honour's further observation that, while the parties may value non-material contributions to the welfare of the family more highly than material contributions, these are not matters that lend themselves to detailed examination and analysis by a court.
[42] Generally, the Court has a broad discretion in determining the approach to adopt in considering what order to make under s 20(1) . As Brereton J (with whom Basten JA and Hunt A-JA agreed) said in Kardos v Sarbutt (2006) 34 Fam LR 550 at 564 [51] (relying on Norbis v Norbis (1986) 161 CLR 513): 'Although in the majority of cases, the global approach is likely to be more convenient than an asset-by-asset approach, the application of the asset-by-asset approach does not of itself amount to an error of law'. ...
[43] If a global approach is adopted, regard must still be had to the origin and nature of the different assets. If an asset-by-asset approach is adopted , care must be taken to avoid the risk of undervaluing domestic and non-financial contributions and regard must be had to the overall result : Kardos v Sarbutt (at 563 [51], 564 [54]). Some situations do not lend themselves either to a pure global approach or to a pure asset-by-asset approach. In some cases the judge may decide to have regard to the particular contributions made to individual assets, weigh up the overall respective contributions to the parties and make differing apportionments in relation to the interests of the parties in different assets. " (Emphasis added)
The purpose of identifying and valuing the property of the parties is to determine the divisible pool of property: Bilous v Mudaliar (at [24]) per Ipp JA (Giles and McColl JJA agreeing), while "the 'holistic value judgment' is the final step in the process of ... deciding what adjustment of property seems just and equitable having regard to the [identified] contributions": Howlett v Neilson [2005] NSWCA 149; (2005) 33 Fam L R 402 (at [25]); Saric v Steward [2006] NSWCA 260; (2007) DFC 95,401 (at [61]); Chanter v Catts (at [22]).
Brief reference should also be made to the principles which govern appellate review of a s 20 order. As Campbell JA (with whom Santow and Bryson JJA agreed) explained in Manns v Kennedy (at [68] ff) there are two issues on such an appeal: first, whether the primary judge made correct findings of fact, secondly, whether the primary judge erred in carrying out the evaluative task performed in deciding what, in all the circumstances, seemed just and equitable having regard to the factors listed in s 20. The first task proceeds on the same principles as any appeal concerning findings of fact. In considering the ultimate s 20 order, however, the Court must recognise the discretionary nature of the exercise and approach its consideration in the manner laid down in House v R [1936] HCA 40; (1936) 55 CLR 499 (at 504 - 505) per Dixon, Evatt and McTiernan JJ. As Campbell JA explained:
" 70 Another type of task concerns the evaluative task that the primary judge has performed, of deciding what, in all the circumstances, having regard to the factors listed in section 20, seems just and equitable. Part of that task involves weighing the various matters that need to be taken into account. Part of that task can involve deciding what is the most appropriate methodology to use, in the circumstances, to carry out the evaluative task. Insofar as the appeal involves the question of as at what date the valuation should be taken, that is a question of the appropriate methodology to carry out the statutory task. Each of those aspects of the evaluative task involves the exercise of a judicial discretion. Its discretionary nature is underlined by the expression 'to it seems' when section 20 talks of the adjustment that 'to it seems just and equitable' . (Emphasis in original)
I would add to Campbell JA's observations, a reference to Bryson JA's reasons in Chanter v Catts (at [62] - [65]) in which his Honour emphasised that the final s 20 order is an evaluative determination of a discretionary nature, "not susceptible of complete exposition, and appellate review is limited", and, in substance, that appellate courts should exercise restraint in interfering with the ultimate s 20 order because "[i]n a process like this different evaluations by different minds are to be expected and are not indications of error".
Consideration
In my view, the starting point for an understanding of the primary judge's reasons is to recognise that the appellant only sought orders adjusting the parties' interests in "March Rising". The respondent resisted his claim on the basis that the orders he sought in relation to that property were not appropriate and that a larger order should be made in her favour, but, again only in relation to "March Rising". Although the respondent did not file a cross-claim at trial, it is apparent that the parties treated her resistance to the appellant's claim and submissions as to what a just and equitable order would be as having the same effect. The respondent also contended at trial that the superannuation fund held in the appellant's name was accumulated throughout the relationship and was therefore joint property. The appellant does not challenge the proposition that the superannuation monies formed part of the global asset pool which the primary judge had to take into consideration in coming to his conclusion as to what was just and equitable.
As I have said, it was open to his Honour to determine the approach to be adopted in determining what order to make. I would understand that the reason he calculated the respondent's assets as at 1999 was to determine whether, when "March Rising" was purchased, she was in a position to undertake the substantial and expensive renovation task it must have been apparent its run-down state required. This no doubt went in part at least to determining whether it was probable that the appellant made the statement for which the respondent contended concerning the circumstances in which they became tenants in common (see [29] above). Further, it should be noted, that even though his Honour assessed the appellant's interest in Wylde Street as at $410,000 as at 1994, he expressly (at [37]) proceeded on the basis that as at 1999 it had a market value of $500,000 substantially all of which the appellant spent to purchase "March Rising".
It was unnecessary, having regard to the focus of the case, for the primary judge to embark upon a minute examination of the parties' assets as at 1994. The position at that time was not irrelevant to an ultimate overview as to the appropriateness of any order he contemplated, but what was of more relevance was the parties' position immediately prior to the purchase of "March Rising" and then, primarily, in terms of the assets of each party which were available for its acquisition and improvement.
However the appellant's asset position as at 1994 was relevant to assessing, I would infer, the respondent's contention that the appellant had been able to substantially augment his financial position during their relationship.
Although the primary judge did not make an express finding that the respondent contributed in financial terms to the appellant's superannuation, it is in my view implicit in his Honour's conclusion (at [56]) that the appellant's contributions during the period they occupied "March Rising" were minimal and that during this period he was engaged in share dealing building up his portfolio to about $723,000, that his Honour considered he was able to do so because the respondent shouldered the burden of renovating, managing and administering the property.
It is not apparent that the primary judge failed to take into account what the appellant contended was his undisputed contributions of some $35,000 or so to the renovation and improvement of "March Rising". Rather, his Honour accepted (at [48]) that the appellant carried out or arranged some minor work, but also clearly accepted that it was the respondent's direct financial contributions and non-financial contributions to that property which warranted the "very substantial adjustment" in her favour.
Insofar as the "March Rising" property itself was concerned, the primary judge accepted that while the respondent did not contribute to its purchase price with all the monies coming from the sale of the appellant's property, nevertheless she had contributed substantially since its purchase. She had spent a large amount of money on its improvement and renovation, almost commensurate with the purchase price, as well as managing and administering the property during the period the parties lived there prior to separation. I would understand the weight his Honour placed on the respondent's non-financial contribution to include him accepting her evidence that she had worked full-time on the renovations for approximately two years. The effect of her expenditure and work was such as to more than increase the value of the property in the eight years from 1999 to 2007 from $455,000 to $1.075 million, albeit that by the time of trial its value had declined to $830,000. This amply justified, in my view, his Honour's conclusion that "a very substantial adjustment" should be made in her favour to reflect her contribution: see generally primary judgment (at [48], [49], [53] - [56]).
I turn to the appellant's claim that the primary judge erred in failing to make an allowance in his favour in respect of the respondent's occupation of "March Rising" post-separation. His Honour refused to do so (at [58]) because she had paid all expenses for the property since separation, as well as maintaining and improving it.
In Callow v Rupchev [2009] NSWCA 148; (2009) 14 BPR 27,533 (at [60]) the Court (Beazley and Basten JJA and Handley AJA) held that where a matrimonial or similar relationship has broken down and one party is, for practical purposes, excluded from the family home, the one who remains in possession may be taken to do so to the exclusion of the other, and to be liable to pay an occupation fee. This was whether or not the circumstances in which the "excluded" party departed fell within the scope of the doctrine of ouster, because (at [61]) the underlying purpose, where a domestic relationship has broken down, is to achieve a fair and reasonable settlement of property interests as between the parties to the relationship. Blackburne J reached the same conclusion in French v Barcham [2008] EWHC 1505 (Ch) ; [2009] 1 WLR 1124; [2009] 1 All ER 145 (at [34]).
Any such allowance must, as the appellant accepted, be subject to an allowance to the party who remains in occupation for any amounts expended for expenses or improvements: Callow v Rupchev (at [30], [60]). I understand the primary judge rejected the appellant's contention that the respondent should pay an occupation allowance, having regard not only her actual expenditure on the property, but also to the fact that she had improved its value after separation by, I infer, non-financial contributions. The appellant received the benefit of this to the extent that "March Rising" held its value in the light of the downturn in property values and prior to trial. It seems improbable that a tenant would effect the sort of improvement to the value of a property that primary judge appears to have contemplated. In my view the appellant has not demonstrated any error by his Honour in this respect. I would reject this ground of appeal.
Conclusion
The appellant has established that the primary judge made one factual error as to the Advance Bank account. However in my view that error was not material. It appears that whatever the balance in that account was as at 1994, at some stage, to the extent it was not "lost" in the appellant's share trading, it was invested into the portfolio which became the appellant's superannuation fund. The primary judge took into consideration the value of that fund as at the date of separation and left that amount entirely in the appellant's possession. Accordingly it was taken into consideration in the ultimate disposition of the matter.
In my view, the appellant has not established that the ultimate exercise of his Honour's discretion miscarried. The substantial thrust of the appellant's submissions was that there had to be a mathematical equivalence between the s 20 order and the parties' assets whether at the outset of the relationship or in relation to their financial contributions to "March Rising". That submission is without foundation. The statutory direction is that the order be just and equitable. I would accept the respondent's submission that the logic of his Honour's order was that the appellant retained all the benefit of his superannuation - a substantial portion of which had been accumulated during the period the parties lived in "March Rising" (as well as various other chattels and artworks) and an amount to reflect his Honour's view of his contribution to "March Rising", while the respondent received an amount reflecting her contributions to that property both of a financial and non-financial nature. Each otherwise retained his or her assets. That approach fell well within the bounds of the evaluative exercise for which s 20 calls.
I propose that the appeal be dismissed with costs.
BASTEN JA : I agree that the appeal must be dismissed and the appellant must pay the respondent's costs. I agree with the reasons given by McColl JA and the further reasons of Hodgson JA.
Two points should be borne in mind in applying s 20 of the Property (Relationships) Act 1984 (NSW), set out at [9] above. First, the power of the Court, invoked on an application by a party to a domestic relationship, is to "make such order adjusting the interests of the parties in the property as to it seems just and equitable". Although the trial judge must determine whether to make an order or not, it is artificial to distinguish that (discretionary) decision from an assessment of what constitutes a just and equitable apportionment of property between parties to a defunct relationship. The correct approach on appeal is not dissimilar to that which has been accepted in relation to the Family Provision Act 1982 (NSW): see Singer v Berghouse [1994] HCA 40; 181 CLR 201 at 212 (Mason CJ, Deane and McHugh JJ) referring to Goodman v Windeyer [1980] HCA 31; 144 CLR 490 at 501 (Gibbs J) and Golosky v Golosky [1993] NSWCA 111 (Kirby P). The result is that the appellant must either demonstrate an erroneous approach, which has caused the evaluative exercise to miscarry, or a result which, for some reason which is not readily identifiable, falls outside the range of what might be considered reasonable in the circumstances established to the satisfaction of the appellate court.
The second factor flowing from the language of s 20 is that the Court must have regard to the "financial and non-financial contributions of both parties". How that task is undertaken should, as explained by Hodgson JA, be revealed in the reasons given by the trial judge.
There were aspects of the fact-finding in this case which were troubling. These included the underestimate of the amount held by the appellant with the Advance Bank in 1999, together with a failure expressly to take account of the value of the Wylde Street property and the seat on the Stock Exchange in assessing the appellant's assets. He also failed to give credit for the appellant's contribution of $35,000 to the improvement of the property and failed to make any allowance for a notional occupation fee for the period after the relationship broke down, during which the respondent was in sole occupation of the property. None of these factors was entirely ignored, but neither were they satisfactorily addressed. For example, although the $35,000 claimed contribution was not rejected or taken into the calculation expressly, the trial judge may have implicitly set it off against the contribution of the respondent, which was said to be "in excess of" the purchase price of the property, contributed by the appellant. If that were the reasoning, it could have been better explained.
In order to succeed, however, the appellant needed to demonstrate that these findings against his interests had a material effect on the outcome, so as to render it not just and equitable. To that end, he contended that having paid the full purchase price of the property in February 1999, an amount of $455,000, it could not be just and equitable to allow him only a $200,000 interest in the property at a time when it was worth $830,000. Thus, although the property had almost doubled in value, his interest had declined. Even accepting that the respondent had invested a similar amount in the renovation and improvement of the property, he said that his interest should have remained that recorded on the title, namely one-half. The respondent's investment had been anticipated and reflected in the registration of the title in both names as tenants-in-common in equal shares.
The superficial attraction of this submission needs to be qualified in two ways. First, there is the need to take into account the respondent's evidence, accepted by the trial judge, as to her "non-financial" contribution to the renovation and improvement of the home, in terms of time and effort. Secondly, account must be taken of the superannuation fund, which remained entirely in the appellant's name.
There may, in some cases, be difficulties in assessing the value of the individual time and effort of the parties where it is reflected in different kinds of return. In the present case, the trial judge did not and did not need to, undertake that exercise. In substance, the non-financial contributions of each party can be seen to be reflected in the respective major assets to which they contributed, namely the value of the property and the value of the appellant's superannuation fund. As at February 2007, the fund was valued at $723,000 and the property at $830,000. (Neither was encumbered.) The total was thus $1.553 million. If these assets were divided equally, each party would obtain $776,000. The adjustment required by the judgment, namely transfer to the respondent of the appellant's half interest in the property for a payment of $200,000, resulted in an apportionment, on a global basis, of $923,000 in his favour and $630,000 in favour of the respondent.
After taking into account the appellant's complaints in respect of the assessment by the trial judge of the net worth of the appellant at the commencement of the relationship, the division as calculated above demonstrates no significant unexplained disproportion between the net worth of each at the commencement and that of each at the end of the relationship. Once it is accepted (the contrary not being argued) that contributions of time and effort could be valued equally, the result clearly fell within the range of what was just and equitable.
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